PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. )
File by the Registrant [XX]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for use of Commission
[ ] Definitive Proxy Statement Only (as Permitted by Rule 14a-6(e)(2)
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
OZO DIVERSIFIED AUTOMATION, INC.
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(Name of Registrant as Specified In Its Charter)
DAVID J. WOLENSKI, PRESIDENT
----------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate Box:)
[ ] No fee required
[ X ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0 -11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
(4) Proposed maximum aggregate value of transaction: $920,000
(5) Total fee paid: $184
[ ] Fee paid previously with preliminary materials.
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(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
OZO DIVERSIFIED AUTOMATION, INC.
7450 EAST JEWELL AVENUE, SUITE A
DENVER, CO 80231
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on December 30, 1998
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November 25, 1998
TO THE SHAREHOLDERS OF OZO DIVERSIFIED AUTOMATION, INC.:
The Annual Meeting of Shareholders of, Inc., a Colorado corporation, (the
"Company") will be held on Thursday, December 30, 1998, at 10:30 a.m., at the
Denver Hilton South, 7801 East Orchard Road, Englewood, Colorado 80111, to
consider and take action on:
1. The election of five directors to serve until the next annual meeting of
shareholders and until their successors have been elected and qualified.
2. A proposal to approve the sale of certain assets of the Company and
change the name of the Company to RMMR, Inc. to become effective at the
time of the completion of the sale of assets.
3. A proposal to amend Article VI of the Company's Restated Articles of
Incorporation, as amended, to reduce the vote required by shareholders
to approve asset dispositions, mergers, consolidations or exchanges, and
any other matter which would require an amendment to the Company's
Restated Articles of Incorporation, as amended, from two-thirds to a
majority.
4. A proposal to adopt a new Article IX to the Company's Restated Articles
of Incorporation, as amended, to provide for the limitation of certain
liabilities of the Company's directors to the Company and its
shareholders as permitted under Section 7-108-402(1) of the Colorado
Business Corporation Act.
5. Such other business as may properly come before the meeting, or any
adjournments or postponements thereof.
The discussion of the proposals set forth above is intended only as a
summary, and is qualified in its entirety by the information contained in the
accompanying Proxy Statement.
Only holders of record of common stock at the close of business on
November 25, 1998, will be entitled to notice of and to vote at this Annual
Meeting, and any postponements or adjournments thereof.
SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON AND THE
MANAGEMENT OF THE COMPANY HOPES THAT YOU WILL FIND IT CONVENIENT TO ATTEND.
Shareholders, whether or not they expect to be present at the meeting,
are requested to sign and date the enclosed proxy and return it promptly in
the envelope enclosed for that purpose. Any person giving a proxy has the
power to revoke it at any time by following the instructions provided in the
Proxy Statement.
By Order of the Board of Directors:
David J. Wolenski, President
PLEASE DATE, SIGN AND PROMPTLY RETURN YOUR PROXY SO THAT YOUR
SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES. THE GIVING OF SUCH PROXY
DOES NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
YOUR VOTE IS IMPORTANT
OZO DIVERSIFIED AUTOMATION, INC.
7450 EAST JEWELL AVEUNE, SUITE A
DENVER, CO 80231
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 30, 1998
November 25, 1998
This Proxy Statement is being furnished to shareholders of OZO
Diversified Automation, Inc. ("OZO" or the "Company") in connection with the
solicitation of proxies by and on behalf of the Company's Board of Directors
for use at the Annual Meeting of shareholders of the Company (the "Annual
Meeting") and at any adjournments or postponements thereof. The Annual
Meeting will be held on Thursday, December 30, 1998, at 10:30 a.m. local
time, at the Denver Hilton South, 7801 East Orchard Road, Englewood, Colorado
80111. This Proxy Statement will be first mailed to the shareholders on or
about December 3, 1998.
VOTING SECURITIES
Holders of record of the Company's common stock, par value $0.10 per
share (the "Common Stock") at the close of business on November 25, 1998 (the
"Record Date") will be entitled to vote on all matters. On the Record Date,
the Company had 490,664 shares of Common Stock outstanding. The holders
of shares of Common Stock are entitled to one vote per share. The Company's
only class of voting securities is the Common Stock.
One-third of the issued and outstanding shares of the Common Stock
entitled to vote, represented in person or by proxy, constitutes a quorum for
the transaction of business at the Annual Meeting. As described in more
detail below, if there is a quorum present:
the five nominees for the Board receiving the greatest number of
affirmative votes will be elected as directors (proposal 1); and
two-thirds of the outstanding shares must vote in favor of proposals 2
through 4 for their approval.
Management may, in its discretion, seek an adjournment of the Annual
Meeting to a specific time and place if sufficient votes are not cast for the
approval of proposals 2 through 4, or any of them. Management may also
recommend that the meeting be adjourned if a quorum is not present, although
Management has not determined whether to do so. If Management moves for an
adjournment to solicit additional votes, the proxy holder will vote all
proxies it receives which have directed a vote FOR proposal 2 in favor of the
adjournment for the purpose of soliciting additional votes; the proxy holder
will vote all proxies received which voted against proposal 2 against any
such adjournment; all proxies which direct an abstention with respect to
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the vote on proposal 2 will abstain from voting on any adjournment proposed
for the purpose of soliciting additional votes.
Abstentions will be treated as shares present or represented and
entitled to vote for purposes of determining the presence of a quorum, but
will not be considered as votes cast in determining whether a matter has been
approved by the shareholders. Any shares a broker indicates on its proxy
that it does not have the authority to vote on any particular matter because
it has not received direction from the beneficial owner thereof will not be
counted as voting on a particular matter.
A shareholder who gives his proxy pursuant to this solicitation may
revoke it at any time before it is voted either by giving notice of the
revocation thereof to the Secretary of the Company, by filing another proxy
with the Secretary or by attending the Annual Meeting and voting in person.
All properly executed and unrevoked proxies, if received in time, will be
voted in accordance with the instructions of the beneficial owners contained
thereon.
The Company will bear the cost of the solicitation. In addition to
solicitation by mail, the Company will request banks, brokers and other
custodian nominees and fiduciaries to supply proxy materials to the
beneficial owners of the Company's Common Stock for whom they hold shares and
will reimburse them for their reasonable expenses in so doing.
DISSENTERS' RIGHTS
The Colorado Business Corporation Act provides shareholders a right to
dissent and obtain payment of the fair value of their shares from the Company
under certain circumstances; provided, that, if the shareholder has a right
to dissent, the shareholder strictly follows the statutory procedures for
doing so to perfect his or her dissenters' rights. In connection with
Proposal 2 contained in this Proxy Statement shareholders will have the right
to dissent if the Company completes the proposed sale of assets. For a
detailed description of these dissenters' rights and the statutory provisions
governing them, see the section entitled "DISSENTERS' RIGHTS" appearing
immediately after the description of Proposal 4.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
OZO has only one class of outstanding voting securities, its Common
Stock. The following table sets forth information as of November 25, 1998
with respect to the ownership of the Common Stock for all directors,
individually, all executive officers named in the compensation table,
individually, all executive officers and directors as a group, and all
beneficial owners of more than five percent of the Common Stock.
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SHARES OWNED PERCENT
NAME OF BENEFICIAL OWNER BENEFICIALLY (1) OF CLASS
- ------------------------ ---------------- --------
David W. Orthman 129,710 (2) 25%
7450 E. Jewell Ave., Suite A
Denver, CO 80231
David J. Wolenski 66,000 (3) 13%
7450 E. Jewell Ave., Suite A
Denver, CO 80231
Scott E. Salpeter 25,000 (4) 5%
201 S. Biscayne Blvd., #2950
Miami, FL 33131
Alvin L. Katz 86,660 (5) 16%
201 S. Biscayne Blvd., #2950
Miami, FL 33131
Brantley J. Halstead 32,500(6) 6%
7450 E. Jewell Ave., Suite A
Denver, CO 80231
All officers and 339,810 54%
directors as a (2)(3)(4)(5)
group (5 persons)
Steven N. Bronson 120,422 (7) 21%
201 S. Biscayne Blvd., #2950
Miami, FL 33131
James S. Cassel 28,750 (8) 5%
201 S. Biscayne Blvd., #2950
Miami, FL 33131
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(1) As used in this section, the term beneficial ownership with respect to a
security is defined by Rule 13d-3 under the Securities Exchange Act of 1934
as consisting of sole or shared voting power (including the power to vote
or direct the vote) and/or sole or shared investment power (including the
power to dispose or direct the disposition) with respect to the security
through any contract, arrangement, understanding, relationship or
otherwise. Unless otherwise indicated, beneficial ownership is of record
and consists of sole voting and investment power.
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(2) Includes 79,090 shares held jointly with Mr. Orthman's spouse, 10,000
shares owned by Mr. Orthman's spouse, and 35,000 shares underlying stock
options held by Mr. Orthman all of which all are exercisable at $1.125 per
share through June 24, 2002.
(3) Includes 35,000 shares underlying stock options exercisable at $1.125 per
share through June 24, 2002.
(4) Includes 25,000 shares underlying stock options exercisable at $1.125 per
share through June 24, 2002.
(5) Includes the following securities owned by Mr. Katz's spouse: 16,428
shares; 25,000 shares underlying warrants exercisable at $1.00 per share
through April 1, 2001; and 3,750 shares underlying warrants exercisable at
$0.75 per share through October 10, 2001. Also includes the following
securities attributable to the 50% interest of Mr. and Mrs. Katz in a
general partnership: 16,482 shares. Finally, this also includes 25,000
shares underlying stock options held by Mr. Katz exercisable at $1.125 per
share through June 24, 2002.
(6) Includes 7,500 shares and options to acquire 25,000 shares exercisable at
$1.25 per share through February 16, 2003. Of these, options to acquire
12,500 shares do not vest and are not exercisable until September 30, 1999.
(7) Includes 82,900 shares underlying warrants exercisable at $1.00 per share
through April 1, 2001; 3,750 shares underlying warrants exercisable at
$0.75 per share through October 10, 2001; and 11,482 shares issued upon
conversion of promissory notes.
(8) Includes 25,000 shares underlying warrants exercisable at $1.00 per share
through April 1, 2001; and 3,750 shares underlying warrants exercisable at
$0.75 per share through October 10, 2001.
The Company knows of no arrangement, the operation of which may, at a
subsequent date, result in change in control of the Company.
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PROPOSAL 1
ELECTION OF DIRECTORS
The following persons are nominated as directors of the Company for a term
of one year and until the election and qualification of their successors:
Alvin L. Katz
David J. Wolenski
David W. Orthman
Scott E. Salpeter
Brantley J. Halstead
These nominees currently serve as directors and, if reelected, will
constitute the full Board of Directors. If any nominee is unable to serve
or, for good cause, will not serve, the person named in the proxy reserves
the right to substitute another person of his choice as nominee in his place.
Each of the nominees has agreed to serve, if elected. The following table
sets forth the names and ages of the nominees and the executive offices held
by each such person. The Company has no other officers. These officers serve
at the pleasure of the Board of Directors.
IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding the directors
and executive officers of the Company:
NAME AGE POSITION
- ---- --- --------
Alvin L. Katz 69 Director and Chairman of the Board
David J. Wolenski 37 Director and President and Chief Executive Officer
David W. Orthman 48 Director and Director of Research and Development
Scott E. Salpeter 40 Director
Brantley J. Halstead 41 Director and Chief Financial Officer
No arrangement exists between any of the above officers and directors
pursuant to which any one of those persons was elected to such office or
position. There are no family relationships among the directors and
executive officers of the Company.
Directors hold office until the next meeting of shareholders and until a
successor is elected and qualified, or until their resignation. Executive
officers are elected at annual meetings of the Board of Directors. Each such
officer holds office for one year or until a successor has been duly elected
and qualified or until death, resignation or removal.
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A brief summary of the business experience of each person who is currently
an executive officer or director of the Company, and such person's service with
the Company is as follows:
ALVIN L. KATZ has served as Chairman of the Company's Board of Directors
since October 1996. He also serves on the Boards of Directors of: Amtech
Systems, Inc., a public company engaged in the manufacture of capital
equipment in the computer chip manufacturing business; Blimpie International,
a publicly held fast food franchise; Nastech Pharmaceutical Company, Inc., a
public company engaged in the development of pharmaceuticals; BCT, a public
company engaged in the franchising of printing plants; and Mikron
Instruments, Inc., a public company engaged in the manufacture of infrared
parts and equipment. Also, from 1991 until the company was sold in September
1992, Mr. Katz served as Chief Executive Officer of Odessa Engineering Corp.,
a company engaged in the manufacture of pollution monitoring equipment. Since
1981, Mr. Katz also has been an adjunct professor of business management at
Florida Atlantic University.
DAVID J. WOLENSKI has served as President and Chief Executive Officer of
the Company since September 1996. From July 1983 through July 1996, Mr.
Wolenski worked for Johns Manville Corporation, a public company engaged in
the manufacture of fiberglass insulations and related building materials,
serving as a manufacturing manager at Johns Manville s Corona, California
facility from September 1994 through July 1996; and Manager of Quality
Assurance for Johns Manville s Performance Materials Division from March 1991
through September 1994.
DAVID W. ORTHMAN has served as a Director of the Company since February
1992 and has been Director of Research and Development since April 1, 1992.
From June 1990 through March 1992, Mr. Orthman was Director of Special
Projects; from January 1989 to June 1990 Mr. Orthman served as Vice President
of the Company; from March to December 1988, Mr. Orthman served as Chairman
of the Board of Directors of the Company and from October 1983 to March 1988
he served as President of the Company. Mr. Orthman developed the Model 18
and related products and technology, as well as the Models 24, 2-20 and 2-24.
Mr. Orthman also developed the PanelMASTER 18HS and PanelROUTER 16SI high
speed depaneling systems and related products and technology.
SCOTT E. SALPETER has served as a Director of the Company since October
1996. His primary occupation since October 1998 has been that of Managing
Director of CapitaLink, L.C., a venture capital firm located in Miami,
Florida. From September 1996 through September 1998, Mr. Salpeter was Senior
Associate of Catalyst Financial, an affiliate of Barber and Bronson
Incorporated, since September 1996. From 1993 until August 1996, Mr.
Salpeter served as Chief Financial Officer, Treasurer, Vice President, and a
Director of ECOS Group, Inc. (formerly Evans Environmental Corp.), a public
company engaged in environmental consulting and laboratory services. From
1988 through 1992, he served as Chief Financial Officer of Alco International
Group, Inc., a public company engaged in marine transportation. Mr. Salpeter
was an officer of Nova Distributing Co., Inc., a private company within two
years of Nova's June 1992 petition filing for relief under federal bankruptcy
laws. Such proceeding was converted to a liquidation proceeding under Chapter
7 of the Bankruptcy Code in March 1993.
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BRANTLEY J. HALSTEAD was elected as a director on November 13, 1998 and
has been the Company's Chief Financial Officer since February 1998. He
served as Corporate Controller of the Company from September 1997 through
January 1998. Prior to joining the Company, Mr. Halstead served as an
independent Management Consultant from May 1993 to May 1995, and again from
April 1996 through August 1997. From June 1995 through March 1996, Mr.
Halstead was a Senior Manager with Price Bednar Consulting LLC and from May
1988 through May 1993 he was employed as a Management Consultant with
Deloitte & Touche. Mr. Halstead s management consulting efforts focused on
the use of information technology to facilitate business process
re-engineering. If the Transaction with the JOT Sub is completed, Mr.
Halstead will become president, chief executive officer, treasurer, and chief
financial officer of the Company.
MEETINGS OF THE BOARD AND COMMITTEES
The Board of Directors held six formal meetings during the year ended
December 31, 1997 and, during the current year, it has held five formal
meetings. Each director attended at least 75% of the formal meetings either
in person or by telephone. In addition, regular communications were
maintained throughout the year among all of the officers and directors of the
Company and the directors acted by unanimous several times.
Messrs Katz and Salpeter are members of the Board of Directors' audit
committee. The principal functions of the Audit Committee are: (i) to
recommend to the Board of Directors the selection of independent public
accountants; (ii) review management's plan for engaging independent public
accountants during the year to perform non-audit services and consider what
effect these services will have on the independence of the accountants;
(iii) review the annual financial statements and other financial reports
which require approval by the Board of Directors; (iv) review the adequacy
of the Company's system of internal accounting controls; and (v) review the
scope of the independent public accountants' audit plans and the results of
the audit. The audit committee met once during 1997 and once subsequently.
The Board of Directors does not have an executive committee or
nominating committee, or committees performing similar functions.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the Company's directors and officers and persons who own more
than ten percent of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange
Commission (the "SEC"). Directors, officers and greater than ten-percent
shareholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) reports filed.
Based solely on its review of the copies of the reports it received from
persons required to file, the Company believes that during the period from
January 1, 1997 through December 31,
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1997, all filing requirements applicable to its officers, directors and
greater than ten-percent shareholders were complied with except as follows:
Mr. Salpeter and Mr. Katz did not file their Forms 3 until April 1997,
several months after they became directors of the Company. Messrs. Katz,
Salpeter, Orthman and Wolenski did not file Forms 4 reporting the grant of
options in June 1997 until a Form 5 filed in February 1998. It is the
Company's position that the grant of the options were an exempt transaction
pursuant to Rule 16b-3 inasmuch as they were approved by the entire Board
and, therefore, no reports were required until the Form 5.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information regarding compensation paid
to the Chief Executive Officer of OZO for the three years ended December 31,
1997. No other person who is currently an executive officer of OZO earned
salary and bonus compensation exceeding $100,000 during any of those years.
The table below includes all compensation paid to the Chief Executive Officer
by the Company.
Annual Compensation Long Term Compensation
---------------------------------------------------------------------------------
Awards Payout
-----------------------------------------
Securities
Restricted underlying LTIP All Other
Name and Position Year Salary ($) Bonus Other Awards ($) Options & SAR's ($) Payout Compensation
- ----------------------------------------------------------------------------------------------------------------------------------
David J. Wolenski, 1997 48,000 -0- -0- 18,750 -0- -0- -0-
President & CEO 1996 13,000* -0- -0- 5,000 -0- -0- -0-
1995 -0- -0- -0- -0- -0- -0- -0-
Marjorie Zimdars- 1997 -0- -0- -0- -0- -0- -0- -0-
Orthman 1996 26,300** -0- -0- -0- -0- -0- -0-
CEO 1995 39,500 -0- -0- -0- -0- -0- -0-
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* Mr. Wolenski became CEO on September 23, 1996 and the salary shown is for
September 23, 1996 through December 31, 1996.
** Mrs. Orthman was CEO until September 22, 1996 and the salary shown is for
January 1 - September 22, 1996.
OPTION/SAR GRANTS TABLE
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Other than as set forth in the table below, during the year ended
December 31, 1997, the Company did not grant any stock options to its
executive officers named in the Summary Compensation Table. The Company has
never granted any stock appreciation rights.
Number of Percent of Total
Securities Options/
Underlying SARs Granted to
Options/SARs Employees in Fiscal Exercise or Base
Name Granted (#) Year Price ($/sh) Expiration Date
- ---------------------------------------------------------------------------------------------------------
David J. Wolenski, CEO 35,000 100% $1.125/sh 6/24/2002
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES.
The following table reflects that no stock options were exercised by the
chief executive officer during 1997 and the year-end value of options held by
the chief executive officer on December 31, 1997.
(a) (b) (c) (d) (e)
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Name Shares acquired on Value realized # of unexercised Value of in-the-money
exercise (#) ($) options at FY end options at FY end
(exercisable/ (exercisable/
unexercisable) unexercisable)
- --------------------------------------------------------------------------------------------------------------------------------
David J. Wolenski, -0- $-0- 35,000/ $0/
CEO 0 0
The Company does not maintain any bonus, profit sharing, retirement,
stock option, stock purchase or other remuneration or incentive (long-term or
otherwise) plans for its employees.
COMPENSATION OF DIRECTORS
As of December 31, 1997, and for the year then ended, cash compensation
was not being paid to members of the Board of Directors for their services as
directors, except for their salaries as reported above under executive
officer compensation. On June 24, 1997, the Board granted stock options to
its directors in lieu of cash compensation. The Board granted 25,000 options
each to Alvin L. Katz and Scott E. Salpeter, and 35,000 options each to David
W. Orthman and David J. Wolenski (see OPTION/SAR GRANTS TABLE and AGGREGATED
OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR VALUE TABLE above). All
of the aforementioned options vested immediately and are exercisable at
$1.125 per share until June 24, 2002.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
As of December 31, 1997, the Company had no formalized employment contracts
with any executive officer. The Company has no compensation plan or arrangement
with respect to any executive officer which plan or arrangement results or will
result from the resignation, retirement or any other termination of such
individuals employment with the Company. The
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Company has no plan or arrangement with respect to any such persons which
will result from a change in control of the Company or a change in the
individual s responsibilities following a change in control. The Company has
an agreement with the President and CEO whereby 20,000 shares of common stock
were awarded in December 1997 as non-cash compensation. The stock award was
based on performance, and approved by the compensation committee of the Board
of Directors.
OZO has no other arrangements pursuant to which it compensates its
directors for acting in their capacities as such.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Throughout the course of 1997, David Wolenski loaned the Company a total
of $304,000, for working capital purposes. This amount bore interest at 2%
over prime. As of December 31, 1997, the outstanding loan balance had been
repaid in full. Subsequent to December 31, 1997, Mr. Wolenski loaned the
Company an additional $213,200, for working capital purposes. This amount
was repayable on demand and bears interest at 2% over prime. As of the date
of this proxy statement, $11,716 remains unpaid.
Also after December 31, 1997, Alvin Katz loaned the Company $75,000,
also for working capital purposes. Mr. Katz' loan to the Company was
originally repayable on December 30, 1998, but was extended by Mr. Katz for
no additional consideration until January 31, 1999 and bears interest at 10%
per annum. Both loans are collateralized by a substantial portion of the
Company's assets.
On November 13, 1998, in an effort to reduce the Company's total
indebtedness the Board of Directors authorized a reduction in the conversion
price of outstanding convertible promissory noes from $1.14 per share to
$.875, a price which was still in excess of the market price on November 13,
1998 as quoted by the OTC Bulletin Board. As a result each of the twelve
$10,000 promissory notes are convertible into 11,428 shares as compared to
8,772 shares at the higher conversion price. One of the Company's directors,
Alvin Katz, owns one convertible promissory note through his wife and two
additional convertible promissory notes through a partnership in which Mr.
Katz and his wife have a 50% interest. Subsequently both Mrs. Katz and the
partnership converted their promissory notes to acquire shares of common
stock at the lower price. Mr. Katz abstained on the vote in favor of
reducing the conversion price, but benefitted by that decision.
OZO entered into an investment banking agreement in June 1998 with
Catalyst Financial Corp. of Miami, Florida. At that time, Scott Salpeter, a
director of the Company, was an employee and officer of Catalyst. Steve
Bronson and James Cassel, two persons identified in the shareholder table
above, were also affiliated with Catalyst. Subsequently Mr. Cassel and Mr.
Bronson separated, and Mr. Cassel, with Mr. Salpeter, formed a new
corporation known as CapitaLink. CapitaLink assumed the contract following
the separation. The contract did not require that any monthly fee be paid to
Catalyst or CapitaLink, but it does require that a fee be paid in connection
with the completion of the Transaction with JOT Sub. The amount of the fee
was not precisely set forth in the agreement, but the parties have agreed to
a fee of $_______ payable to CapitaLink if the Transaction is completed. Mr.
Salpeter abstained from the Board's vote with respect to the CapitaLink
agreement and the fee. Following the completion or abandonment of the
Transaction, the agreement will expire.
VOTE REQUIRED AND RECOMMENDATION
Directors of the Company are elected by a plurality vote. This means that
the five nominees receiving the greatest number of votes cast will be elected as
the Company's Board of Directors. THE BOARD RECOMMENDS VOTING "FOR" ITS SLATE
OF NOMINEES WHICH INCLUDES DAVID
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W. ORTHMAN, DAVID J. WOLENSKI, SCOTT E. SALPETER, ALVIN L. KATZ AND BRANTLEY
J. HALSTEAD. Unless otherwise specified, the enclosed proxy will be voted
"FOR" the election of management's slate of nominees.
PROPOSAL 2
SALE OF CERTAIN ASSETS
The Company has entered into an Asset Purchase Agreement (the
"Agreement"), dated November 4, 1998, with JOT Automation, Inc. ("JOT Sub"),
a wholly-owned Texas subsidiary of JOT Automation Group Oyj ("JOT Parent"), a
Finnish corporation which has its common stock registered on the Helsinki
Stock Exchange. JOT Sub is engaged in the business of production automation
and robotics for use within the electronics industry. The Company proposes
to sell to JOT Sub substantially all of its assets relating to its routing
and depaneling business in exchange for $920,000 and the assumption of the
operating liabilities related to the Company's business assets (the
"Transaction"). If the shareholders approve the Transaction and the Company
completes the Transaction, shareholders will be entitled to dissenters'
rights under Colorado law. See "Dissenters' Rights" below and the separate
section entitled "DISSENTERS' RIGHTS" which appears immediately following the
discussion of Proposal 4.
INFORMATION ABOUT THE TRANSACTION
MATERIAL TERMS OF THE AGREEMENT
The Agreement provides for the Company to sell and JOT Sub to purchase
substantially all of the Company's assets, including its routing and
depaneling business in exchange for $920,000, assumption by JOT Sub of the
operating liabilities of the business and JOT Sub's grant of a license to the
Company for use of the technology being conveyed for certain specified
purposes. The assets being sold by the Company include, without limitation,
all of the Company's intellectual property, the rights to the name "OZO
Diversified Automation," machinery and equipment, inventory, accounts
receivable, the office lease and all of its furniture and fixtures. The
liabilities being assumed by JOT Sub include (i) all of the Company's
accounts payable generated in the ordinary course of business that have been
incurred prior to the closing of the Transaction and that will become due
after the closing; (ii) obligations of the Company under the contracts being
assigned and/or assumed by JOT Sub; (iii) specified payroll obligations and
employee vacation and sick leave pay; (iv) specified domestic and
international product warranties. JOT Sub is not assuming any other
liabilities, whether accrued, absolute or contingent, including liabilities
based on or arising out of or in connection with (a) any defects in products
manufactured or sold by the Company, (b) any implied or express warranties
relating to products manufactured or sold by the Company in excess of the
accruals identified in clause (iv), above, or (c) any pension or other
benefit liability relating to the Company's employees who may be hired by JOT
Sub.
If the Transaction is completed, the Company will be required to change
its corporate name so as not to include the words "OZO Diversified
Automation." A change in the
12
Company's corporate name requires shareholder approval and, because the name
is one of the assets being sold under the Agreement, if shareholders approve
the Transaction, they also will be approving a change of the Company's name
from "OZO Diversified Automation, Inc." to "RMMR, Inc."
If the Transaction is completed, substantially all of the Company's
employees, including some of the Company's executive officers, will become
employees of JOT Sub. Effective upon the closing of the Transaction, the
Company will be required to release each of the employees hired by JOT Sub
from all employment, non-compete and non-disclosure agreements related to
their employment with the Company.
The Agreement provides for a 90-day transition period (the "Transition
Period") during which the Company's former employees hired by JOT Sub may
provide certain transitional services to the Company for a specified hourly
rate. During the transitional period, the Company will sublease office space
from JOT Sub for $200 per month. After the Transitional Period, the Company
will be required to relocate its offices.
The Agreement contains representations and warranties and
indemnification provisions by the parties which Management believes are
standard in transactions of a similar nature. Completion of the Transaction
is conditioned on, among other things, receipt of approval of the Company's
shareholders, accuracy of the representations and warranties at the time of
closing, performance and compliance with all covenants and conditions
contained in the Agreement, receipt of opinions of legal counsel,
satisfactory completion of due diligence by JOT Sub, and no material change
in the Company's business occurring between the date of the Agreement and the
date of closing.
EMPLOYMENT AGREEMENTS
In connection with the closing of the Transaction, David J. Wolenski,
President, Chief Executive Officer and a director of the Company, and David
W. Orthman, Director of Research and Development, Secretary-Treasurer and a
director of the Company will enter into three-year employment agreements with
JOT Sub. Upon entering into these agreements, they will resign their
positions as executive officers and employees of the Company. Mr. Wolenski
will serve as President of a designated subsidiary of JOT Sub and Mr. Orthman
will serve as Director of Research and Development of a designated subsidiary
of JOT Sub. For his services as President of the designated subsidiary of
JOT Sub, Mr. Wolenski will be paid a base salary of $75,000 per year, an
annual bonus of up to $10,000 based on performance criteria, stock options
and other standard employee benefits. For his services as Director of
Research and Development of the designated subsidiary of JOT Sub, Mr. Orthman
will be paid a base salary of $62,000 per year for services of four days per
week to JOT Sub, bonuses as may be determined and granted by JOT Sub from
time to time and other standard employee benefits. Except for their titles,
duties and compensation, the employment contracts for Mr. Wolenski and Mr.
Orthman will be substantially the same. Mr. Orthman will continue to provide
services to OZO for one day per week for $1,000 per month compensation.
13
CONSULTING AGREEMENT
In connection with the closing of the Transaction, the Company and
Brantley J. Halstead, Chief Financial Officer and a director of the Company,
will enter into a consulting agreement with JOT Sub to provide certain
transition consulting services to JOT Sub during the Transition Period for an
established rate of $35 per hour to be paid to the Company. The Company has
entered into an employment agreement with Mr. Halstead to the effect that,
following the completion of the Transaction, Mr. Halstead will become
president, treasurer, chief executive officer, and chief financial officer of
the Company. He will be paid compensation at the rate of $72,000 per year,
and will be entitled to other standard employee benefits and, in the
discretion of the Board, bonuses.
REASONS FOR THE PROPOSED SALE OF ASSETS AND CHANGES IN BUSINESS AFTER THE
TRANSACTION
The Company's Board of Directors has carefully reviewed and considered
the Transaction and has determined that it is in the best interests of the
Company and its shareholders. During 1998, Asian markets have weakened
economically resulting in a substantial decrease in the Company's sales and
revenues. The Company's routing and depaneling business yields low gross
margins. Management cannot predict a timetable for a recovery of the Asian
markets and believes that weak economic conditions may persist in Asian
markets for the remainder of 1998 and into the first half of 1999. Although
management has implemented cost reduction measures and has attempted to match
expense spending against projected revenues, the Company incurred a net loss
of $40,000 during the nine months ended September 30, 1998 on total revenues
during the period of approximately $1,350,000 (as compared to net income of
$78,000 on revenues of more than $2,000,000 during the same nine month period
in 1997).
In addition, the Company has a significant amount of indebtedness which
was originally due in full on December 30, 1998, although approximately
$______ has been extended until January 31, 1999. This includes $______ of
convertible promissory notes, $120,000 of non-convertible promissory notes,
and $75,000 owing to a director, Alvin Katz. Unless the Company completes
the transaction with JOT Sub as contemplated, the Company will not be able to
pay timely without a substantial cash infusion into the Company. Management
has negotiated the Agreement with the goal of obtaining cash to pay its
promissory note obligations when due, with sufficient cash remaining to
launch the Company into a new line of business in the bio-medical and
bio-technical fields utilizing the license rights it will receive as part of
the purchase price. The Company believes its proposed new line of business
will provide a greater opportunity for growth in both revenue (with an
expected increase in gross margins) and expected market size, as well as
being far less dependent on Asian markets.
Finally, the Company believes that it has an opportunity to complete the
research and development necessary for the creation of a prototype device for
micro-manipulation in the bio-medical and bio-technical fields which is
expected to work in conjunction with extremely powerful microscopes at
extremely small tolerances. OZO expects to use the licensed technology to
develop this prototype over the six to nine months following the transition
period. The Company is unable to develop this device in its current
financial situation, but the completion of the Transaction will
14
provide the Company with sufficient funds to continue this work for a period
of at least twelve months. (See "Use of Estimated Net Proceeds," below.)
There can, however, be no assurance that the Company will succeed in
developing a micro-manipulation device with the necessary degree of accuracy
within the budget provided by the completion of the Transaction. If the
Company is not able to do so, then it probably will not have sufficient
capital available to complete the micro-dissection device or to pursue any
other line of business, and there can be no assurance that the Company would
be able to obtain any additional funding. In such a case, it is likely that
the Company would have to cease business operations, and shareholders may not
receive any return on their investment.
CHANGES IN MANAGEMENT AFTER THE TRANSACTION CLOSING
Following the closing of the Transaction, Mr. Wolenski and Mr. Orthman
will resign as executive officers to become employees and executive officers
of JOT Sub. They will continue to serve on the board of directors of the
Company. During the Transition Period, Mr. Wolenski will provide the Company
transitional management services at a specified hourly rate to the Company.
The Company will pay this consulting fee to JOT Sub to reimburse it for
employment expenses it incurs in providing the services of Mr. Wolenski to
the Company. Mr. Orthman will continue to provide services to the Company in
addition to his duties to JOT Sub as permitted in his employment agreement
with JOT Sub.
The Board of Directors has elected Brantley J. Halstead as President,
Chief Executive Officer, Treasurer and Chief Financial Officer of the Company
effective upon the completion of the Transaction. Mr. Halstead has served as
the Company's Chief Financial Officer since February 1998. From September
1997 until February 1998, he served as the Company's Controller. Mr.
Halstead has extensive experience in management consulting, focusing
primarily on the application of information technology to facilitate business
process re-engineering.
USE OF ESTIMATED NET PROCEEDS
Following the completion of the Transaction, the Company expects to
receive approximately $600,000 after payment of a finders' fee (estimated to
be $____), and after repayment of debt due in December 1998 and January 1999.
The Company expects to pay the costs of the Transaction with other corporate
funds. The Company believes that these funds will enable the Company to
continue its research and development activities in developing the
micro-dissection prototype device, and in pursuing the patent application for
the proposed micro-dissection device. Generally the Company anticipates that
the net proceeds expected to be made available by the completion of the
Transaction will be expended over the following twelve to fifteen months as
follows:
15
Salaries (1) $300,000
--------------------------------------------
Rent and Leasehold Improvements 90,000
--------------------------------------------
Consulting Fees (2) 40,000
--------------------------------------------
Materials and Supplies 100,000
--------------------------------------------
Miscellaneous (3) 70,000
--------------------------------------------
(1) Including officers' salaries and fringe benefits.
(2) Including a consulting fee of approximately $12,000 to be payable to
David Orthman.
(3) Including legal, accounting, and working capital.
AS NOTED, THE FUTURE CONDUCT OF THE BUSINESS OF THE COMPANY AND ITS
RESPONSE TO ISSUES RAISED BY THIRD PARTIES ARE DEPENDENT UPON A NUMBER OF
FACTORS, AND THERE CAN BE NO ASSURANCE THAT THE COMPANY WILL BE ABLE TO
CONDUCT ITS OPERATIONS OR COMPLETE THE PROTOTYPE MICRO-DISSECTION DEVICE AS
CONTEMPLATED. CERTAIN STATEMENTS CONTAINED IN THIS REPORT USING THE TERMS
"MAY," "EXPECTS TO," AND OTHER TERMS DENOTING FUTURE POSSIBILITIES, ARE
FORWARD-LOOKING STATEMENTS. THE ACCURACY OF THESE STATEMENTS CANNOT BE
GUARANTEED AS THEY ARE SUBJECT TO A VARIETY OF RISKS WHICH ARE BEYOND THE
COMPANY'S ABILITY TO PREDICT OR CONTROL AND WHICH MAY CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY FROM THE PROJECTIONS OR ESTIMATES CONTAINED HEREIN. THESE
RISKS INCLUDE, BUT ARE NOT LIMITED TO, THE RISKS DESCRIBED ABOVE, AND THE
OTHER RISKS ASSOCIATED WITH START-UP OPERATIONS IN COMPANIES DEPENDENT ON THE
DEVELOPMENT OF NEW TECHNOLOGY, AND THE OPERATIONS OF A COMPANY WITH NO
HISTORICAL PROFITABILITY AND LITTLE PROBABILITY OF OBTAINING ADDITIONAL
FINANCING BEYOND THE CAPITAL AVAILABLE. IT IS IMPORTANT THAT EACH PERSON
REVIEWING THIS PROXY STATEMENT UNDERSTANDS THE SIGNIFICANT RISKS ATTENDANT TO
THE OPERATIONS OF THE COMPANY. THE COMPANY DISCLAIMS ANY OBLIGATION TO
UPDATE ANY FORWARD-LOOKING STATEMENT MADE HEREIN EXCEPT TO THE EXTENT
REQUIRED TO DO SO IN FURTHER REPORTS TO BE FILED PURSUANT TO THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.
MATERIAL CHANGES IN SHAREHOLDER RIGHTS AFTER THE TRANSACTION
The Company plans to continue operations but change the nature of its
business after the Transaction as described in the foregoing section entitled
"Changes in the Business of the Company after the Transaction."
Consequently, the rights of the Company's shareholders after the Transaction
will not differ materially from their rights before the sale of assets.
ACCOUNTING TREATMENT AND FEDERAL INCOME TAX CONSEQUENCES OF THE TRANSACTION
The Transaction will be accounted for as a sale and the Company will
recognize gain on the sale of its assets to the extent the portion of the
purchase price allocated to such assets exceeds the Company's basis in the
assets. Any gain will be offset by the Company's operating loss
carry-forwards. Management does not expect that the Company will be liable
for any state or federal income taxes.
16
PRO FORMA FINANCIAL INFORMATION
Pro forma financial statements, including balance sheet at September 30,
1998 and statements of operations for the year ended December 31, 1997 and
the nine months ended September 30, 1998 have been prepared to reflect the
Transaction as if it occurred on January 1, 1998. These pro forma financial
statements are included as Exhibit C to this Proxy Statement.
REGULATORY REQUIREMENTS
No federal or state regulatory requirements must be met or approval
obtained in connection with the Company's proposed sale of assets.
NO PREVIOUS RELATIONSHIP WITH JOT SUB OR JOT PARENT
Prior to this proposed transaction, none of the Company, its directors,
officers or affiliates has had any material contracts, arrangements,
understandings, relationships, negotiations or transactions with JOT Sub or
JOT Parent.
MARKET INFORMATION
On October 5, 1998, the day immediately preceding the Company's public
announcement of the proposed sale of assets, the range of the bid and asked
prices of the Company's common stock as quoted on the OTC Bulletin Board was
$1.125 (high) to $0.5625 (low). On that date, the Company's common stock
closed at $0.844.
DISSENTERS' RIGHTS
Article 113 of the Colorado Business Corporation Act provides a
procedure by which shareholders who were record holders of Common Stock
immediately prior to the effectiveness of the sale of assets may be entitled
to an appraisal of the fair value of their shares, exclusive of any element
of value arising from the expectation or accomplishment of the sale of
assets, together with a fair rate of interest, if any, to be paid thereon.
Any shareholder who wishes to exercise this right to an appraisal must do so
by making written demand to the Company. The written demand must be received
by the Company before voting on the proposal for the sale of assets.
Shareholders desiring to exercise their dissenters' rights must strictly
follow the procedures set forth in Article 113 of the Colorado Business
Corporation Act.
For more detailed information about dissenters' rights which will be
available to shareholders in connection with the proposed sale of assets if
the sale is approved and completed, see the section entitled "DISSENTERS'
RIGHTS" which appears immediately following the discussion of Proposal 4.
17
PROPOSAL 3
TO REDUCE THE SHAREHOLDER VOTING REQUIREMENTS
The Board of Directors has approved and recommends that the shareholders
approve the following amendment to the Company's Restated Articles of
Incorporation, as amended. The amendment proposed would reduce the voting
requirement for shareholder approval of asset dispositions, mergers,
consolidations or exchanges, or any other matter which would require an
amendment to the Company's Restated Articles of Incorporation, as amended,
from two-thirds to a majority. The following discussion is qualified in its
entirety by the text of the Article VI as it is proposed to be amended is
included as Exhibit A to this Proxy Statement. If approved, the amendment
would become effective upon the filing of an Amendment to the Company's
Restated Articles of Incorporation, as amended, with the Secretary of State
of Colorado.
The proposed amendment to Article IV of the Company's Restated Articles
of Incorporation, as amended, will reduce the affirmative shareholder vote
necessary to approve certain transactions, such as mergers, major
acquisitions or sales of all or substantially all the Company's assets, or
any other matter which would require an amendment to the Company's Restated
Articles of Incorporation. Under the Company's Restated Articles of
Incorporation, as amended to date, the affirmative vote of two-thirds of the
issued and outstanding Common Stock is required to approve such transactions,
either as expressly provided by the language contained therein or the lack of
a provision contained therein. The Colorado Business Corporation Act was
amended effective July 1, 1994, to provide that no action taken by a
corporation requires more than a majority vote of the shares entitled to vote
unless otherwise provided in the corporation's articles of incorporation, or
unless the corporation was formed before July 1, 1994 and its articles of
incorporation do not contain a provision reducing the voting requirement from
two-thirds to not less than a majority.
Due to the dispersion of the Company's shareholders, it is difficult, if
not impossible, for the Company to locate and obtain the vote of two-thirds
of the outstanding shares. The Board of Directors believes that it is in the
best interests of the Company to reduce the voting requirement from
two-thirds to a majority of the shares entitled to vote in order to conform
with the recent amendments to the Colorado Business Corporation Act, so that
a minority of the Company's shareholders will not be able to thwart the will
of the majority.
Other than as described elsewhere in this Proxy Statement, the Board of
Directors has no present or contemplated plans to enter into any transactions
that would require approval of the Company's shareholders.
VOTE REQUIRED AND RECOMMENDATION
Approval of this Proposal 3 for the Company to amend its Restated
Articles of Incorporation to reduce the shareholder voting requirements
requires the affirmative vote of two-thirds of the outstanding shares of the
Company's Common Stock. THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS
THAT SHAREHOLDERS VOTE FOR THIS PROPOSAL TO AMEND THE
18
COMPANY'S RESTATED ARTICLES OF INCORPORATION, AS AMENDED, TO REDUCE THE
SHAREHOLDER VOTING REQUIREMENTS. Unless otherwise specified, the enclosed
proxy will be voted "FOR" the approval of this Proposal 3.
PROPOSAL 4
TO PROVIDE FOR THE LIMITATION OF CERTAIN LIABILITIES OF THE COMPANY'S DIRECTORS
TO THE COMPANY AND ITS SHAREHOLDERS
The Board of Directors has approved an amendment to the Company's
Restated Articles of Incorporation, as amended, to add a new Article IX which
would limit certain liabilities of the Company's directors to the Company and
its shareholders as permitted under Section 7-108-402(1) of the Colorado
Business Corporation Act. The following discussion is qualified in its
entirety by the text of the proposed Article IX attached hereto as Exhibit B.
If approved, the amendment would become effective upon the filing of an
Amendment to the Company's Restated Articles of Incorporation, as amended,
with the Secretary of State of Colorado.
Proposed Article IX of the Restated Articles will limit the personal
liability of the Company's directors for monetary damages for certain
breaches of the fiduciary duty of care as permitted under Section
7-108-402(1) of the Colorado Business Corporation Act. The Colorado Business
Corporation Act permits a Colorado corporation to limit or eliminate the
personal monetary liability of its directors to the corporation or its
shareholders by reason of their breach of the fiduciary duty of care as
directors, including liability for negligence, and gross negligence, by
including a provision to this effect in its Articles of Incorporation. This
provision of the Colorado Business Corporation Act was enacted after the
Company's inception.
Proposed Article IX of the Restated Articles would NOT permit any
limitation upon the liability of a director for: (i) any breach of his or her
duty of loyalty to the Company and its shareholders, (ii) acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) assenting to an unlawful distribution made in
violation of section 7-106-401 of the Colorado Business Corporation Act or
the Articles of Incorporation, or (iv) any transaction from which he or she
directly or indirectly derived an improper personal benefit. Accordingly,
the provisions limiting or eliminating the potential monetary liability of
directors permitted by the Colorado Business Corporation Act apply only to
the "duty of care" of directors. The provision is not retroactive to limit
liability for acts or omissions which occurred prior to the date of its
adoption by Company's shareholders.
In performing their duties, the Company's directors are scrutinized
under the "business judgment rule" which stipulates the fiduciary duties of
care and loyalty imposed upon directors. Under the business judgment rule, a
director is required to perform his or her duties as a director in good
faith, in a manner he or she reasonably believes to be in the best interests
of the corporation, and with such care as an ordinarily prudent person in a
like position would use under similar circumstances.
19
The "duty of care" requires that each director act in a manner which,
after a reasonable investigation, he or she believes in good faith to be in
the best interests of the Company and all of its shareholders and requires
that each director, in the performance of his or her corporate
responsibilities, exercise the care that an ordinary prudent person would
exercise under similar circumstances. The "duty of loyalty" prohibits
faithlessness and self-dealing by directors and prohibits directors from
using their corporate position to make a personal profit or gain other
personal advantage.
In recent years, litigation seeking to impose liability on directors and
officers of publicly-held corporations for violations of the duty of care has
become commonplace. To avoid liability, the director is required to show
that he conducted himself in strict compliance with the duty of care as set
forth in the business judgment rule. In practice, the application of this
duty varies widely among the courts, leaving directors with little guidance
and certainty as to what constitutes adequate care under a given set of
circumstances. Compounding this uncertainty, in several decisions, courts
imposed a clairvoyant duty upon directors, despite the fact that the actions
of the directors in exercising reasonable care are supposed to be judged as
of the time and under the circumstances existing at the time the decision was
made.
This type of litigation is expensive to defend, with costs frequently
amounting to hundreds of thousands, and sometimes millions of dollars. In
many cases, costs of defense exceed the means of individual defendants, even
if ultimately they are vindicated on the issue of individual liability or
wrongdoing. In addition, in view of the costs and uncertainties of
litigation, it is often prudent to settle such claims. While settlements
frequently are for only a fraction of the amount claimed, the settlement
amount may well exceed the financial resources of individual defendants. In
summary, without the benefit of protective measures such as indemnification
and limitation of liability as permitted under the Colorado Business
Corporation Act, exposure to the costs and risks of claims of personal
liability for corporate directors may exceed any benefit to them of serving
as a director of a public corporation.
The risks of personal liability for directors has traditionally been
mitigated through directors' and officers' liability insurance ("D&O
Insurance"). Changes in the market for D&O Insurance over time has resulted
in meaningful coverage becoming unavailable for directors and officers of
many corporations. Insurance carriers have in certain cases declined to
renew existing directors' and officers' liability policies, or have increased
premiums, thereby making the cost of obtaining such insurance prohibitive.
Moreover, policies often exclude coverage for areas where the service of
qualified independent directors is most needed and beneficial to the Company.
For example, many policies do not cover liabilities or expenses arising from
directors' and officers' activities in response to attempted takeovers of a
corporation.
In response to the above developments regarding litigation against
directors and the general unavailability of meaningful D&O Insurance, in 1987
the Colorado legislature adopted Section 7-108-402 of the Colorado Business
Corporation Act which permits a corporation to limit or eliminate the
personal monetary liability of a director for certain breaches of the duty of
care. Effectively, the limitation acts as a substitute for, or a supplement
to, D&O Insurance coverage.
20
In the opinion of the Board of Directors, inclusion of a provision for
limitation of liability will best position the Company to attract and retain
qualified candidates to serve as its directors. Although the Company has not
experienced difficulty finding qualified candidates to serve on its Board of
Directors to date, it believes that it may experience difficulty in the
future if protective measures are not taken.
This provision would prevent the Company and its shareholders, but not
third parties, from bringing actions for monetary damages based upon a
director's negligent or grossly negligent business decisions, including those
related to attempts to change control of the Company, to the benefit of the
Board and at the expense of the shareholders. Thus, if the proposal to add a
provision to limit the monetary liability of directors is approved, the
Company or a shareholder will be able to prosecute an action against a
director for monetary damages for breach of fiduciary duty only if it can be
shown that such damages have been caused by a breach of the duty of loyalty,
a failure to act in good faith, intentional misconduct, a knowing violation
of law, a direct or indirect improper personal benefit, or an illegal
distribution. It would not limit or eliminate the right of the Company or
any shareholder to seek an injunction or any other non-monetary relief if a
director breaches his or her duty of care. Although equitable remedies
remain available, they may be inadequate as a practical matter.
The provision for the limitation of liability proposed to be included in
the Restated Articles is intended to be effective only against actions by the
Company and its shareholders. Third party plaintiffs, such as creditors,
will not be prevented from recovering damages on the basis of the provision.
In addition, the provision would apply only to claims against a director
arising out of his or her status as a director and would not apply to claims
arising from his status as an officer or his or her status in any other
capacity; nor would it apply to a director's responsibilities under any other
law, such as the federal securities laws. If this proposed provision is
approved, changes in Colorado law further limiting or eliminating personal
liability of directors automatically will be applicable without further
shareholder approval.
Neither the Board of Directors nor any of its members have experienced
any recent litigation which would have been affected by the above provision
had it been in effect previously. The proposal to include this provision in
the Restated Articles is not the result of any pending or threatened
litigation against any member of the Company's Board of Directors.
VOTE REQUIRED AND RECOMMENDATION
Approval of this Proposal 4 for the Company to amend its Restated
Articles of Incorporation to provide for the limitation of certain
liabilities of the Company's directors to the Company and its shareholders as
permitted under Section 7-108-402(1) requires the affirmative vote of
two-thirds of the outstanding shares of the Company's Common Stock.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THIS PROPOSAL TO AMEND THE COMPANY'S RESTATED ARTICLES OF INCORPORATION, AS
AMENDED. It should be noted that the directors of the Company face a potential
conflict of interest in recommending to the shareholders an amendment which
would relieve them of future liability to
21
the shareholders or to the Company. However, the Board of Directors
recommends approval of this amendment because it believes the provision for
limitation of monetary liability of directors for certain acts, as permitted
under the Colorado Business Corporation Act, will encourage capable
individuals to continue to serve as, and become directors of, the Company and
that adoption of the amendment is in the best interests of the Company.
Unless otherwise specified, the enclosed proxy will be voted "FOR" the
approval of this Proposal 4.
DISSENTERS' RIGHTS
To the extent shareholders may be entitled under Colorado law to dissent
and obtain payment of the fair value of their shares from the Company as
referenced under Proposal 2, persons desiring to exercise their dissenters'
rights must strictly comply with the provisions of Article 113 of the
Colorado Business Corporation Act (the "Dissenters' Rights Statute"). A copy
of the Dissenters' Rights Statute is included in this Proxy Statement as
Exhibit D. The following summary of the procedures for complying with the
Dissenters' Rights Statute is qualified in its entirety by the actual
provisions of the Dissenters' Rights Statute.
If the sale of assets is completed, the Company will give a written
notice (the "Original Notice") to all shareholders who are entitled to demand
payment for their shares under Article 113 (being only those shareholders who
provided written notice to the Company of their intention to dissent pursuant
to the preceding paragraph and who did not vote the shares in favor of
Proposal 2). The Company will give this notice no later than ten days after
the applicable effective date of the transaction effected. In the notice,
the Company will:
State that the Sale of Assets was authorized and the effective date of the
sale;
State the address to which the shareholder must send a demand for payment,
and an address where certificates for shares must be deposited;
Supply a form for demanding payment;
Set the date by which the Company must receive the payment demand and stock
certificates; and
Include a copy of Article 113.
Any shareholder entitled to dissent who wishes to dissent must comply
with the instructions in the notice which the Company will send, including
providing the Company with the appropriate demand for payment and depositing
the certificate(s) representing their shares of OZO common stock. Except in
certain limited circumstances, the demand for payment and deposit of
certificates are irrevocable. A shareholder who does not demand payment and
deposit the shareholder's share certificates as required by the date or dates
set in the dissenters' notice will forfeit his or her right to payment for
the shares under Article 113 and, thereafter, will be
22
entitled only to the payment of the amount approved for payment to
non-dissenting shareholders for their fractional shares.
Following the effectiveness of the sale of assets or receipt of the
demand for payment, whichever is later, the Company will pay each dissenter
who complied with the statutory requirements the amount the Company estimates
to be the fair value of the dissenter's shares, plus accrued interest. The
payment will be accompanied by the information required by Section
7-113-206(2).
If a person entitled to receive payment from the Company pursuant to
Article 113 is dissatisfied with the estimate of payment from Company, he or
she may give notice to the Company in writing of the dissenter's estimate of
the fair value of the dissenter's shares and of the amount of interest due.
Such person may demand payment of such estimate, less any payment previously
made. The dissenting shareholder may also make such demand if the Company
fails to make payment within sixty days after the date set in the Company's
Original Notice. A dissenter waives the right to demand payment under
Section 7-113-209 unless the dissenter causes the Company to receive the
notice required by Section 7-113-209(1) of this section within thirty days
after the Company made or offered payment for the dissenter's shares.
If a dissenting shareholder's demand for payment remains unresolved, the
Company may, within sixty days after receiving the payment demand, commence a
proceeding and petition the court to determine the fair value of the shares
and accrued interest pursuant to Section 7-113-301. If the Company does not
commence the proceeding within the sixty-day period, it will pay to each
dissenter whose demand remains unresolved the amount demanded. The court
proceeding will be conducted as provided in Section 7-113-301 ET SEQ.
INDEPENDENT AUDITORS
The independent accounting firm of Wheeler Wasoff, P.C. audited the
Company's financial statements for the years ended December 31, 1997 and
1996. This firm has been selected by the Board of Directors to audit of the
financial statements of the Company for the year ending December 31, 1998.
A representative of Wheeler Wasoff, P.C. is not expected to be present at the
Annual Meeting.
PROPOSALS FROM SHAREHOLDERS
Proposals from shareholders intended to be present at the next Annual
Meeting of shareholders should be addressed to the Company, Attention:
Corporate Secretary, 7450 East Jewell Avenue, Suite A, Denver, Colorado
80231, and must be received by the Company by July 26, 1999. Upon receipt of
any such proposal, the Company shall determine whether or not to include any
such proposal in the Proxy Statement and proxy in accordance with applicable
law. It is suggested that such proposals be forwarded by Certified
Mail-Return Receipt Requested.
23
ANNUAL REPORT TO SHAREHOLDERS
This proxy statement is being accompanied by the Company's Annual Report
on Form 10-KSB for the year ended December 31, 1997 and its Quarterly Report
on Form 10-QSB for the period ended September 30, 1998. The 1997 Form 10-KSB
includes the audited financial statements for the Company.
OTHER MATTERS
Management does not know of any other matters to be brought before the
meeting. Should any other matter requiring a vote of shareholders arise at
the meeting, the persons named in the proxy will vote the proxies in
accordance with their best judgment.
By Order of the Board of Directors:
OZO DIVERSIFIED AUTOMATION, INC.
David J. Wolenski, President
24
EXHIBIT A
TEXT OF ARTICLE VI AS PROPOSED TO BE AMENDED
EXHIBIT A
PROPOSED AMENDED ARTICLE VI
ARTICLE VI
SHAREHOLDER VOTING
Section 1. QUORUM. A quorum for the transaction of business at a duly
called meeting of shareholders shall consist of not less than one-third of
the shares entitled to vote at the meeting.
Section 2. NO CUMULATIVE VOTING. Cumulative voting shall not be
permitted in the election of directors.
Section 3. GENERAL. Elections of directors shall be conducted by a
plurality vote at a duly held meeting at which a quorum is present. Whenever
the shareholders must approve any matter, the affirmative vote of a majority
of the shares entitled to vote, represented in person or by proxy, and voting
at a duly held meeting at which a quorum is present shall be necessary to
constitute such approval or authorization; PROVIDED, THAT, for any matter
requiring shareholder approval for which the Company's articles of
incorporation would require approval of two-thirds of the shares entitled to
vote on the matter as a result of the adoption of such articles under the
now-repealed Colorado Corporation Code, the vote required shall be a majority
of the shares entitled to vote on the matter.
25
EXHIBIT B
TEXT OF PROPOSED NEW ARTICLE IX
ARTICLE IX
LIMITATION ON DIRECTOR LIABILITY
A director of the Corporation shall not be personally liable to the
Corporation or to its shareholders for monetary damages for breach of
fiduciary duty as a director; except that this provision shall not eliminate
or limit the liability of a director to the Corporation or to its
shareholders for monetary damages otherwise existing for (i) any breach of
the director's duty of loyalty to the Corporation or to its shareholders;
(ii) acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law; (iii) acts specified in Section
7-108-403 of the Colorado Business Corporation Act; or (iv) any transaction
from which the director directly or indirectly derived any improper personal
benefit. If the Colorado Business Corporation Act is hereafter amended to
eliminate or limit further the liability of a director, then, in addition to
the elimination and limitation of liability provided by the preceding
sentence, the liability of each director shall be eliminated or limited to
the fullest extent permitted by the Colorado Business Corporation Act as so
amended. Any repeal or modification of this Article IX shall not adversely
affect any right or protection of a director of the corporation under this
Article IX as in effect immediately prior to such repeal or modification with
respect to any liability that, but for this Article IX, would have accrued
prior to such repeal or modification.
26
EXHIBIT C
PRO FORMA FINANCIAL STATEMENTS
PRO FORMA FINANCIALS
OZO Diversified Automation, Inc.
Notes to Pro Forma Financial Statements
(Unaudited)
Note 1 - Summary of Transaction and Basis of Presentation
The accompanying unaudited pro forma financial statements are presented to
reflect the contemplated transaction between the Company and JOT Automation,
Inc.
The accompanying pro forma balance sheet dated September 30, 1998, has been
prepared to give effect to the transaction as if it had occurred on September
30, 1998. The accompanying unaudited pro forma statements of operation are
presented as if the transaction had occurred at the beginning of each of the
periods presented.
Note 2 - Pro Forma Adjustments
(a) assets and liabilities acquired by JOT Automation per the Asset Purchase
Agreement
(b) gross cash proceeds from the asset sale to JOT Automation per the Asset
Purchase Agreement
(c) repayment of liabilities not acquired by JOT Automation per the Asset
Purchase Agreement
(d) payment of transaction expenses and sales taxes incurred executing the
Asset Purchase Agreement
(e) reclassification of operating revenues and expenses to discontinued
operations pursuant to Asset Purchase Agreement with JOT Automation, Inc.
(f) gain recognized on transaction with JOT Automation, Inc.
Note: no income tax expenses are anticipated, as the estimated gain from the
sale is less than the current balance of the net tax loss carryforwards.
27
OZO DIVERSIFIED AUTOMATION, INC.
PRO FORMA STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(UNAUDITED)
Pro Forma Pro Forma
Historical Adjustments Adjusted
---------- ----------- ---------
Net Sales 1,352,919 (1,352,919)(e) --
Cost of Sales 802,615 (802,615)(e) --
--------- --------- -------
Gross Profit 550,304 (550,304) --
Operating Expenses:
Marketing & Sales 119,660 (119,660)(e) --
Research & Development 105,421 (105,421)(e) --
General & Administrative 341,168 341,168
--------- --------- -------
566,249 (225,081) 341,168
--------- --------- -------
(15,945) (325,223) (341,168)
Other (Expense) Items:
Interest expense (24,340) 1,747 (e) (22,593)
--
--
--------- --------- -------
(24,340) 1,747 (22,593)
--------- --------- -------
Income (loss) before Income Tax (40,285) (323,476) (363,761)
--
--
--------- --------- -------
Net Income (Loss) from Continuing Operations (40,285) (323,476) (363,761)
Discontinued Operations:
Income (loss) from discontinued operations
(net of taxes) (323,476)(e) (323,476)
Gain (loss) from disposal of discontinued
operations (net of taxes) 496,283 (f) 496,283
--------- --------- -------
Net Income (Loss) (40,285) 496,283 455,998
--------- --------- -------
--------- --------- -------
Net Income (Loss) per Common Share (0.08) 0.95
Net Income (Loss) per Common Share
Assuming Dilution (0.08) 0.95
Weighted Average Common Shares Outstanding 480,942 480,942
Weighted Average Common Shares Outstanding
Assuming Dilution 480,942 480,942
Please see the accompanying notes to the pro forma financial statements.
28
OZO DIVERSIFIED AUTOMATION, INC.
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
Pro Forma Pro Forma
Historical Adjustments Adjusted
---------- ----------- ---------
Net Sales 2,715,991 (2,715,991)(e) --
Cost of Sales 1,490,352 (1,490,352)(e) --
--------- --------- -------
Gross Profit 1,225,639 (1,225,639) --
Operating Expenses:
Marketing & Sales 255,964 (255,964)(e) --
Research & Development 562,020 (562,020)(e) --
General & Administrative 154,414 154,414
--------- --------- -------
972,398 (817,984) 154,414
--------- --------- -------
253,241 (407,655) (154,414)
Other (Expense) Items:
Interest expense (44,942) 14,915 (e) (30,027)
Provision for bad debts (79,109) 79,109 (e) --
Loss on disposition of assets (6,336) 6,336 (e) --
--------- --------- -------
(130,387) 100,360 (30,027)
--------- --------- -------
Income (loss) before Income Tax 122,854 (307,295) (184,441)
Provision for Income Taxes 15,689 (15,689)(e)
Tax Benefit of Operating Loss Carryforwards (15,689) 15,689 (e)
--------- --------- -------
Net Income (Loss) from Continuing Operations 122,854 (307,295) (184,441)
Discontinued Operations:
Income (loss) from discontinued operations
(net of taxes) (307,295)(e) (307,295)
Gain (loss) from disposal of discontinued
operations (net of taxes) --
--------- --------- -------
-- (307,295) (307,295)
--------- --------- -------
Net Income (Loss) 122,854 -- 122,854
--------- --------- -------
--------- --------- -------
Net Income (Loss) per Common Share 0.27 0.27
Net Income (Loss) per Common Share
Assuming Dilution 0.18 0.18
Weighted Average Common Shares Outstanding 458,218 458,218
Weighted Average Common Shares Outstanding
Assuming Dilution 693,218 693,218
Please see the accompanying notes to the pro forma financial statements.
29
OZO DIVERSIFIED AUTOMATION, INC.
PRO FORMA BALANCE SHEET
SEPTEMBER 30, 1998
(UNAUDITED)
ASSETS
Pro Forma Pro Forma
Historical Adjustments Adjusted
CURRENT ASSETS
Cash 607 (607)(a) 456,391
920,000 (b)
(393,609)(c)
(70,000)(d)
Accounts and notes receivable, net 131,296 (131,296)(a) --
Inventories 366,866 (366,866)(a) --
Prepaid expenses 11,215 (11,215)(a) --
------- --------- -------
Total Current Assets 509,984 (53,593) 456,391
PROPERTY AND EQUIPMENT
Manufacturing 40,391 (40,391)(a) --
Furniture & Fixtures 83,581 (83,581)(a) --
Capitalized Leases 204,814 (204,814)(a) --
Leasehold Improvements 5,010 (5,010)(a) --
Vehicle 10,820 (10,820)(a) --
------- --------- -------
344,616 (344,616) --
Less accumulated depreciation 199,302 (199,302)(a) --
------- --------- -------
Total Property and Equipment 145,314 (145,314) --
OTHER ASSETS
Deferred Financing Costs 2,255 2,255
Other 2,859 2,859
------- --------- -------
5,114 -- 5,114
------- --------- -------
TOTAL ASSETS 660,412 (198,907) 461,505
------- --------- -------
------- --------- -------
30
OZO DIVERSIFIED AUTOMATION, INC.
PRO FORMA BALANCE SHEET
SEPTEMBER 30, 1998
(UNAUDITED)
LIABILITIES AND SHAREHOLDER'S EQUITY
Pro Forma Pro Forma
Historical Adjustments Adjusted
CURRENT LIABILITIES
Current portion of notes payable and
Capitalized lease obligation $281,835 (41,835)(a) 240,000
(240,000)(c) (240,000)
Accounts payable and accrued expenses 149,902 (149,902)(a) --
Note payable - Bank 27,415 (27,415)(a) --
Note payable - Officer 78,609 (78,609)(c) --
Note payable - Director 75,000 (75,000)(c) --
------- --------- -------
Total Current Liabilities 612,761 (612,761) --
LONG-TERM DEBT AND CAPITALIZED LEASE 82,429 (82,429)(a) --
------- --------- -------
Total Liabilities 695,190 (695,190) --
------- --------- -------
------- --------- -------
SHAREHOLDERS' EQUITY
Preferred stock $0.10 par value, Authorized
1,000,000 shares, Issued - none
Common stock, $0.10 par value, Authorized 48,316 48,316
5,000,000 shares, Issued and
outstanding - 483,164 (1998)
Capital in excess of par value 1,198,004 1,198,004
Accumulated deficit (1,281,098) 496,283 (784,815)
--
--
---------- --------- ---------
Total Shareholders' (Deficiency) Equity (34,778) 496,283 461,505
---------- --------- ---------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY 660,412 (198,907) 461,505
---------- --------- ---------
---------- --------- ---------
Please see the accompanying notes to the pro forma financial statements.
31
EXHIBIT D
DISSENTERS' RIGHTS STATUTE
ARTICLE 113, C.R.S. TITLE 7
7-113-101. DEFINITIONS. For purposes of this article:
(1) "Beneficial shareholder" means the beneficial owner of shares held in a
voting trust or by a nominee as the record shareholder.
(2) "Corporation" means the issuer of the shares held by a dissenter before the
corporate action, or the surviving or acquiring domestic or foreign corporation,
by merger or share exchange of that issuer.
(3) "Dissenter" means a shareholder who is entitled to dissent from corporate
action under section 7-113-102 and who exercises that right at the time and in
the manner required by part 2 of this article.
(4) "Fair value", with respect to a dissenter's shares, means the value of the
shares immediately before the effective date of the corporate action to which
the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action except to the extent that exclusion would
be inequitable.
(5) "Interest" means interest from the effective date of the corporate action
until the date of payment, at the average rate currently paid by the corporation
on its principal bank loans or, if none, at the legal rate as specified in
section 5-12-101, C.R.S.
(6) "Record shareholder" means the person in whose name shares are registered
in the records of a corporation or the beneficial owner of shares that are
registered in the name of a nominee to the extent such owner is recognized by
the corporation as the shareholder as provided in section 7-107-204.
(7) "Shareholder" means either a record shareholder or a beneficial
shareholder.
7-113-102. RIGHT TO DISSENT. (1) A shareholder, whether or not entitled to
vote, is entitled to dissent and obtain payment of the fair value of the
shareholder's shares in the event of any of the following corporate actions:
(a) Consummation of a plan of merger to which the corporation is a party
if: (I) Approval by the shareholders of that corporation is required for
the merger by section 7-111-103 or 7-111-104 or by the articles of
incorporation; or (II) The corporation is a subsidiary that is merged with
its parent corporation under section 7-111-104;
(b) Consummation of a plan of share exchange to which the corporation is a
party as the corporation whose shares will be acquired;
(c) Consummation of a sale, lease, exchange, or other disposition of all,
or substantially all, of the property of the corporation for which a
shareholder vote is required under section 7-112-102 (1); and
(d) Consummation of a sale, lease, exchange, or other disposition of all,
or substantially all, of the property of an entity controlled by the
corporation if the shareholders of the corporation were entitled to vote
upon the consent of the corporation to the disposition pursuant to section
7-112-102 (2).
(1.3) A shareholder is not entitled to dissent and obtain payment, under
subsection (1) of this section, of the fair value of the shares of any class
or series of shares which either were listed on a national securities exchange
registered under the federal "Securities Exchange Act of 1934", as amended, or
on the national market system of the national association of securities dealers
automated quotation system, or were held of record by more than two thousand
shareholders, at the time of:
32
(a) The record date fixed under section 7-107-107 to determine the
shareholders entitled to receive notice of the shareholders' meeting at
which the corporate action is submitted to a vote;
(b) The record date fixed under section 7-107-104 to determine
shareholders entitled to sign writings consenting to the corporate action;
or
(c) The effective date of the corporate action if the corporate action is
authorized other than by a vote of shareholders.
(1.8) The limitation set forth in subsection (1.3) of this section shall not
apply if the shareholder will receive for the shareholder's shares, pursuant
to the corporate action, anything except:
(a) Shares of the corporation surviving the consummation of the plan of
merger or share exchange;
(b) Shares of any other corporation which at the effective date of the
plan of merger or share exchange either will be listed on a national
securities exchange registered under the federal "Securities Exchange Act
of 1934", as amended, or on the national market system of the national
association of securities dealers automated quotation system, or will be
held of record by more than two thousand shareholders;
(c) Cash in lieu of fractional shares; or
(d) Any combination of the foregoing described shares or cash in lieu of
fractional shares.
(2) (Deleted by amendment effective June 1, 1996.)
(2.5) A shareholder, whether or not entitled to vote, is entitled to dissent
and obtain payment of the fair value of the shareholder's shares in the event of
a reverse split that reduces the number of shares owned by the shareholder to a
fraction of a share or to scrip if the fractional share or scrip so created is
to be acquired for cash or the scrip is to be voided under section 7-106-104.
(3) A shareholder is entitled to dissent and obtain payment of the fair value of
the shareholder's shares in the event of any corporate action to the extent
provided by the bylaws or a resolution of the board of directors.
(4) A shareholder entitled to dissent and obtain payment for the shareholder's
shares under this article may not challenge the corporate action creating such
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.
7-113-103. DISSENT BY NOMINEES AND BENEFICIAL OWNERS. (1) A record
shareholder may assert dissenters' rights as to fewer than all the shares
registered in the record shareholder's name only if the record shareholder
dissents with respect to all shares beneficially owned by any one person and
causes the corporation to receive written notice which states such dissent
and the name, address, and federal taxpayer identification number, if any, of
each person on whose behalf the record shareholder asserts dissenters'
rights. The rights of a record shareholder under this subsection (1) are
determined as if the shares as to which the record shareholder dissents and
the other shares of the record shareholder were registered in the names of
different shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to the shares
held on the beneficial shareholder's behalf only if:
(a) The beneficial shareholder causes the corporation to receive the
record shareholder's written consent to the dissent not later than the
time the beneficial shareholder asserts dissenters' rights; and
(b) The beneficial shareholder dissents with respect to all shares
beneficially owned by the beneficial shareholder.
33
(3) The corporation may require that, when a record shareholder dissents with
respect to the shares held by any one or more beneficial shareholders, each such
beneficial shareholder must certify to the corporation that the beneficial
shareholder and the record shareholder or record shareholders of all shares
owned beneficially by the beneficial shareholder have asserted, or will timely
assert, dissenters' rights as to all such shares as to which there is no
limitation on the ability to exercise dissenters' rights. Any such requirement
shall be stated in the dissenters' notice given pursuant to section 7-113-203.
7-113-201. NOTICE OF DISSENTERS' RIGHTS. (1) If a proposed corporate action
creating dissenters' rights under section 7-113-102 is submitted to a vote at
a shareholders' meeting, the notice of the meeting shall be given to all
shareholders, whether or not entitled to vote. The notice shall state that
shareholders are or may be entitled to assert dissenters' rights under this
article and shall be accompanied by a copy of this article and the materials,
if any, that, under articles 101 to 117 of this title, are required to be
given to shareholders entitled to vote on the proposed action at the meeting.
Failure to give notice as provided by this subsection (1) shall not affect
any action taken at the shareholders' meeting for which the notice was to
have been given, but any shareholder who was entitled to dissent but who was
not given such notice shall not be precluded from demanding payment for the
shareholder's shares under this article by reason of the shareholder's
failure to comply with the provisions of section 7-113-202 (1).
(2) If a proposed corporate action creating dissenters' rights under section
7-113-102 is authorized without a meeting of shareholders pursuant to section
7-107-104, any written or oral solicitation of a shareholder to execute a
writing consenting to such action contemplated in section 7-107-104 shall be
accompanied or preceded by a written notice stating that shareholders are or
may be entitled to assert dissenters' rights under this article, by a copy of
this article, and by the materials, if any, that, under articles 101 to 117
of this title, would have been required to be given to shareholders entitled
to vote on the proposed action if the proposed action were submitted to a
vote at a shareholders' meeting. Failure to give notice as provided by this
subsection (2) shall not affect any action taken pursuant to section
7-107-104 for which the notice was to have been given, but any shareholder
who was entitled to dissent but who was not given such notice shall not be
precluded from demanding payment for the shareholder's shares under this
article by reason of the shareholder's failure to comply with the provisions
of section 7-113-202 (2).
7-113-202. NOTICE OF INTENT TO DEMAND PAYMENT. (1) If a proposed corporate
action creating dissenters' rights under section 7-113-102 is submitted to a
vote at a shareholders' meeting and if notice of dissenters' rights has been
given to such shareholder in connection with the action pursuant to section
7-113-201 (1), a shareholder who wishes to assert dissenters' rights shall:
(a) Cause the corporation to receive, before the vote is taken, written
notice of the shareholder's intention to demand payment for the
shareholder's shares if the proposed corporate action is effectuated; and
(b) Not vote the shares in favor of the proposed corporate action.
(2) If a proposed corporate action creating dissenters' rights under section
7-113-102 is authorized without a meeting of shareholders pursuant to section
7-107-104 and if notice of dissenters' rights has been given to such
shareholder in connection with the action pursuant to section 7-113-201 (2),
a shareholder who wishes to assert dissenters' rights shall not execute a
writing consenting to the proposed corporate action.
(3) A shareholder who does not satisfy the requirements of subsection (1) or
(2) of this section is not entitled to demand payment for the shareholder's
shares under this article.
7-113-203. DISSENTERS' NOTICE. (1) If a proposed corporate action creating
dissenters' rights under section 7-113-102 is authorized, the corporation
shall give a written dissenters' notice to all shareholders who are entitled
to demand payment for their shares under this article.
(2) The dissenters' notice required by subsection (1) of this section shall be
given no later than ten days after the effective date of the corporate action
creating dissenters' rights under section 7-113-102 and shall:
34
(a) State that the corporate action was authorized and state the effective
date or proposed effective date of the corporate action;
(b) State an address at which the corporation will receive payment demands
and the address of a place where certificates for certificated shares must
be deposited;
(c) Inform holders of uncertificated shares to what extent transfer of the
shares will be restricted after the payment demand is received;
(d) Supply a form for demanding payment, which form shall request a
dissenter to state an address to which payment is to be made;
(e) Set the date by which the corporation must receive the payment demand
and certificates for certificated shares, which date shall not be less
than thirty days after the date the notice required by subsection (1) of
this section is given;
(f) State the requirement contemplated in section 7-113-103 (3), if such
requirement is imposed; and
(g) Be accompanied by a copy of this article.
7-113-204. PROCEDURE TO DEMAND PAYMENT. (1) A shareholder who is given a
dissenters' notice pursuant to section 7-113-203 and who wishes to assert
dissenters' rights shall, in accordance with the terms of the dissenters'
notice:
(a) Cause the corporation to receive a payment demand, which may be the
payment demand form contemplated in section 7-113-203 (2) (d), duly
completed, or may be stated in another writing; and
(b) Deposit the shareholder's certificates for certificated shares.
(2) A shareholder who demands payment in accordance with subsection (1) of
this section retains all rights of a shareholder, except the right to transfer
the shares, until the effective date of the proposed corporate action giving
rise to the shareholder's exercise of dissenters' rights and has only the right
to receive payment for the shares after the effective date of such corporate
action.
(3) Except as provided in section 7-113-207 or 7-113-209 (1) (b), the demand
for payment and deposit of certificates are irrevocable.
(4) A shareholder who does not demand payment and deposit the shareholder's
share certificates as required by the date or dates set in the dissenters'
notice is not entitled to payment for the shares under this article.
7-113-205. UNCERTIFICATED SHARES. (1) Upon receipt of a demand for payment
under section 7-113-204 from a shareholder holding uncertificated shares, and
in lieu of the deposit of certificates representing the shares, the corporation
may restrict the transfer thereof.
(2) In all other respects, the provisions of section 7-113-204 shall be
applicable to shareholders who own uncertificated shares.
7-113-206. PAYMENT. (1) Except as provided in section 7-113-208, upon the
effective date of the corporate action creating dissenters' rights under
section 7-113-102 or upon receipt of a payment demand pursuant to section
7-113-204, whichever is later, the corporation shall pay each dissenter who
complied with section 7-113-204, at the address stated in the payment demand,
or if no such address is stated in the payment demand, at the address shown
on the corporation's current record of shareholders for the record shareholder
holding the dissenter's shares, the amount the corporation estimates to be the
fair value of the dissenter's shares, plus accrued interest.
(2) The payment made pursuant to subsection (1) of this section shall be
accompanied by:
35
(a) The corporation's balance sheet as of the end of its most recent
fiscal year or, if that is not available, the corporation's balance sheet as of
the end of a fiscal year ending not more than sixteen months before the date of
payment, an income statement for that year, and, if the corporation customarily
provides such statements to shareholders, a statement of changes in
shareholders' equity for that year and a statement of cash flow for that year,
which balance sheet and statements shall have been audited if the corporation
customarily provides audited financial statements to shareholders, as well as
the latest available financial statements, if any, for the interim or full-year
period, which financial statements need not be audited;
(b) A statement of the corporation's estimate of the fair value of the
shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's right to demand payment under section
7-113-209; and
(e) A copy of this article.
7-113-207. FAILURE TO TAKE ACTION. (1) If the effective date of the corporate
action creating dissenters' rights under section 7-113-102 does not occur within
sixty days after the date set by the corporation by which the corporation must
receive the payment demand as provided in section 7-113-203, the corporation
shall return the deposited certificates and release the transfer restrictions
imposed on uncertificated shares.
(2) If the effective date of the corporate action creating dissenters' rights
under section 7-113-102 occurs more than sixty days after the date set by the
corporation by which the corporation must receive the payment demand as provided
in section 7-113-203, then the corporation shall send a new dissenters' notice,
as provided in section 7-113-203, and the provisions of sections 7-113-204 to
7-113-209 shall again be applicable.
7-113-208. SPECIAL PROVISIONS RELATING TO SHARES ACQUIRED AFTER ANNOUNCEMENT
OF PROPOSED CORPORATE ACTION. (1) The corporation may, in or with the
dissenters' notice given pursuant to section 7-113-203, state the date of the
first announcement to news media or to shareholders of the terms of the proposed
corporate action creating dissenters' rights under section 7-113-102 and state
that the dissenter shall certify in writing, in or with the dissenter's payment
demand under section 7-113-204, whether or not the dissenter (or the person on
whose behalf dissenters' rights are asserted) acquired beneficial ownership of
the shares before that date. With respect to any dissenter who does not so
certify in writing, in or with the payment demand, that the dissenter or the
person on whose behalf the dissenter asserts dissenters' rights acquired
beneficial ownership of the shares before such date, the corporation may, in
lieu of making the payment provided in section 7-113-206, offer to make such
payment if the dissenter agrees to accept it in full satisfaction of the demand.
(2) An offer to make payment under subsection (1) of this section shall include
or be accompanied by the information required by section 7-113-206 (2).
7-113-209. PROCEDURE IF DISSENTER IS DISSATISFIED WITH PAYMENT OR OFFER. (1)
A dissenter may give notice to the corporation in writing of the dissenter's
estimate of the fair value of the dissenter's shares and of the amount of
interest due and may demand payment of such estimate, less any payment made
under section 7-113-206, or reject the corporation's offer under section
7-113-208 and demand payment of the fair value of the shares and interest
due, if:
(a) The dissenter believes that the amount paid under section 7-113-206
or offered under section 7-113-208 is less than the fair value of the
shares or that the interest due was incorrectly calculated;
(b) The corporation fails to make payment under section 7-113-206 within
sixty days after the date set by the corporation by which the corporation
must receive the payment demand; or
(c) The corporation does not return the deposited certificates or
release the transfer restrictions imposed on uncertificated shares as
required by section 7-113-207 (1).
36
(2) A dissenter waives the right to demand payment under this section unless
the dissenter causes the corporation to receive the notice required by
subsection (1) of this section within thirty days after the corporation made or
offered payment for the dissenter's shares.
7-113-301. COURT ACTION. (1) If a demand for payment under section 7-113-209
remains unresolved, the corporation may, within sixty days after receiving the
payment demand, commence a proceeding and petition the court to determine the
fair value of the shares and accrued interest. If the corporation does not
commence the proceeding within the sixty-day period, it shall pay to each
dissenter whose demand remains unresolved the amount demanded.
(2) The corporation shall commence the proceeding described in subsection
(1) of this section in the district court of the county in this state where
the corporation's principal office is located or, if the corporation has no
principal office in this state, in the district court of the county in which
its registered office is located. If the corporation is a foreign corporation
without a registered office, it shall commence the proceeding in the county
where the registered office of the domestic corporation merged into, or whose
shares were acquired by, the foreign corporation was located.
(3) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unresolved parties to the proceeding commenced
under subsection (2) of this section as in an action against their shares, and
all parties shall be served with a copy of the petition. Service on each
dissenter shall be by registered or certified mail, to the address stated in
such dissenter's payment demand, or if no such address is stated in the payment
demand, at the address shown on the corporation's current record of shareholders
for the record shareholder holding the dissenter's shares, or as provided by
law.
(4) The jurisdiction of the court in which the proceeding is commenced under
subsection (2) of this section is plenary and exclusive. The court may appoint
one or more persons as appraisers to receive evidence and recommend a decision
on the question of fair value. The appraisers have the powers described in the
order appointing them, or in any amendment to such order. The parties to the
proceeding are entitled to the same discovery rights as parties in other civil
proceedings.
(5) Each dissenter made a party to the proceeding commenced under subsection
(2) of this section is entitled to judgment for the amount, if any, by which
the court finds the fair value of the dissenter's shares, plus interest, exceeds
the amount paid by the corporation, or for the fair value, plus interest, of the
dissenter's shares for which the corporation elected to withhold payment under
section 7-113-208.
7-113-302. COURT COSTS AND COUNSEL FEES. (1) The court in an appraisal
proceeding commenced under section 7-113-301 shall determine all costs of the
proceeding, including the reasonable compensation and expenses of appraisers
appointed by the court. The court shall assess the costs against the
corporation; except that the court may assess costs against all or some of the
dissenters, in amounts the court finds equitable, to the extent the court finds
the dissenters acted arbitrarily, vexatiously, or not in good faith in demanding
payment under section 7-113-209.
(2) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable:
(a) Against the corporation and in favor of any dissenters if the court
finds the corporation did not substantially comply with the requirements of
part 2 of this article; or
(b) Against either the corporation or one or more dissenters, in favor
of any other party, if the court finds that the party against whom the fees
and expenses are assessed acted arbitrarily, vexatiously, or not in good faith
with respect to the rights provided by this article.
(3) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the
fees for those services should not be assessed against the corporation, the
court may award to said counsel reasonable fees to be paid out of the amounts
awarded to the dissenters who were benefitted.
37
OZO DIVERSIFIED AUTOMATION, INC.
7450 EAST JEWELL AVENUE, SUITE A
DENVER, CO 80231
PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints DAVID J. WOLENSKI and BRANTLEY J.
HALSTEAD, or either one of them, as Proxy, each with the power to appoint his
substitute, and hereby authorizes them to vote, as designated below, all of
the shares of Common Stock of OZO Diversified Automation, Inc. held of record
by the undersigned on November 25, 1998, at the Annual Meeting of
Shareholders to be held on December 30, 1998 and at any adjournments or
postponements thereof.
1. ELECTION OF DIRECTORS
/ / FOR all nominees listed below (EXCEPT AS MARKED TO THE CONTRARY BELOW)
/ / WITHHOLD AUTHORITY to vote for all nominees listed below
(INSTRUCTION) TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE
MARK THE BOX NEXT TO THE NOMINEE'S NAME BELOW.)
/ / David W. Orthman / / David J. Wolenski / / Scott E. Salpeter / / Alvin L. Katz / / Brantley J. Halstead
2. On approval of the proposed sale of assets of the Company and change of the
Company's name to RMMR, Inc. at the time the sale of assets becomes
effective.
/ / FOR / / AGAINST / / ABSTAIN
3. On approval of the reduction of the vote required by shareholders to
approve asset dispositions, mergers, consolidations or exchanges, and any
other matter which would require an amendment to the Company's Restated
Articles of Incorporation, as amended, from two-thirds to a majority of the
outstanding Common Stock
/ / FOR / / AGAINST / / ABSTAIN
4. On adoption of a new Article IX to the Company's Restated Articles of
Incorporation, as amended, to provide for the limitation of certain
liabilities of the Company's directors to the Company and its shareholders
as permitted under Section 7-108-402(1) of the Colorado Business
Corporation Act.
/ / FOR / / AGAINST / / ABSTAIN
5. In their discretion, the above-named Proxies are authorized to vote upon
such other business as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR THE ELECTION AS DIRECTORS OF ALL NOMINEES AND FOR THE
APPROVAL OF ALL OTHER MATTERS.
PLEASE SIGN EXACTLY AS NAME APPEARS BELOW. WHEN SHARES ARE HELD BY
JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY, AS EXECUTOR,
ADMINISTRATOR, TRUSTEE, OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
/s/
- -------------------------------
Signature
Date: ,1998
-----------------
/s/
- -------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
ENVELOPE